HL Deb 06 March 1985 vol 460 cc1308-10

2.47 p.m.

Lord Beswick

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they can estimate the annual expenditure in the United Kingdom on advertising, and whether they have considered or will consider charging VAT on this expenditure.

The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie)

My Lords, according to figures published by the Advertising Association, total expenditure on advertising in 1983 was £3,579 million. Advertising in newspapers, journals and periodicals is zero-rated; all other advertising is taxable at the standard rate. As to the second part of the Question, I am sure it will be understood that I am not able to make any comment at this time in anticipation of the Budget Statement of my right honourable friend the Chancellor of the Exchequer.

Lord Beswick

My Lords, I am grateful to the noble Earl for his Answer. Will he accept that I am not trying to probe into Budget secrets, but am concerned with principles? Would not the noble Earl agree that if the Government believe it to be necessary to move from direct to indirect taxation, it is desirable to levy those taxes on non-essentials, of which I suggest advertising is one, rather than on such items as home decoration or foodstuffs such as fish and chips?

The Earl of Gowrie

My Lords, all of these are the kinds of matters which the Chancellor will no doubt be weighing as he prepares his Budget Statement. On advertising generally, I think that perhaps we rush in too lightly to condemn marketing in this country; I believe that it performs a very valuable economic role.

Viscount Mountgarret

My Lords, would not my noble friend agree that it might perhaps be less harmful to tax those who may wish to advertise than those who purchase the newspapers or periodicals in which the advertisements appear by the imposition of VAT in that field?

The Earl of Gowrie

My Lords, my noble friend's supplementary question is an indication of how delicate Budget judgments have to be.

Lord Barnett

My Lords, while I accept that the noble Earl the Minister has a better case than usual for not replying to a specific Question, would it not have been better and more straightforward had he said that in fact business advertising is already subject to VAT, since it is part of industrial costs and is passed on to the consumer in the normal way?

The Earl of Gowrie

My Lords, when I said in my initial Answer that all other advertising is taxable at the standard rate I thought I was going a long way towards meeting the noble Lord's point.

Lord Taylor of Gryfe

My Lords, has the Minister made any calculation of the effect of an advertising tax on the receipts of the Treasury from the levies on the independent television companies? Is that not already a substantial tax on advertising?

The Earl of Gowrie

My Lords, I have not done that because I have not been asked to do so.

Lord Harmar-Nicholls

My Lords, is my noble friend aware that the majority view throughout the country, I think, would be that people want to see a few of the taxes removed and not one or two more added to the long list of those which we have already?

The Earl of Gowrie

My Lords, I am sure that my noble friend's sentiment is shared in many quarters.

Viscount St. Davids

My Lords, is it not true that, He who whispers down a well About the goods he has to sell Don't reap the shining silver dollars Like he who climbs a tree and hollers"? If that is true, it means that there is a very flexible framework to this industry and there may well be room here for further taxation by Her Majesty's Government, which could then be removed from other, more sensitive, points elsewhere. Therefore, it may well be worthwhile to look further into this matter.

The Earl of Gowrie

My Lords, I say this in no political sense, but the noble Viscount reminds me of the late Mr. Khrushchev who always had a proverb for every occasion. I should love to have a proverb to cap the noble Viscount's in respect of VAT, but unfortunately I have not come equipped with one.

Lord Beswick

My Lords, does the noble Earl accept that, of course, I realise that there is a case for advertising? But does he not also agree that every day now, through every letter box, there is evidence, supported by the figures which he has given, that advertising has passed the bounds of moderation? Is there not a case for putting it in a similar tax bracket to tobacco and alcohol?

The Earl of Gowrie

My Lords, in respect of the first part of the noble Lord's supplementary question, I recognise a fellow sufferer.

Lord Leatherland

My Lords, does the noble Earl the Minister realise that if he puts a further tax on advertising, he may force many newspapers out of existence?

The Earl of Gowrie

My Lords, I shall note most carefully what the noble Lord. Lord Leatherland, has said.